So what: The news today isn't specific to Ship Finance International, but Frontline's bomb has hit all oil shippers. Overseas Shipholding Group (NYSE: OSG) is down 17% on the day, as investors jump ship from these oil shippers.

Now what: You can't say we didn't see this coming. Earlier this year, a new tanker was taken straight from the shipyard to a war lay-up, meaning there wasn't enough work to make operating the ship profitable.

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Ship Finance is especially vulnerable to a collapse of Frontline. According to their website, 32 vessels out of their total fleet of 73 are chartered to Frontline. These charters would doubtless be cancelled if Frontline goes bankrupt. It would be extremely difficult to find new charterers.

Most of their tanker and OBO vessel-owning subsidiaries have entered into fixed rate management agreements with Frontline Management, a wholly owned subsidiary of Frontline. Frontline Management is responsible for all technical management of the vessels, including crewing, maintenance, repair, capital expenditures, drydocking, vessel taxes, maintaining insurance and other vessel operating expenses.

Ship Finance is controlled by John Fredriksen, who also controls Frontline (through Hemen Holdings). Typically, Frontline calls the shots regarding sales of vessels,etc.

In earlier years, Ship Finance received significant income from a share in Frontline's profits. No longer!

All in all, the failure of Frontline would affect Ship Finance drastically in several ways.